residual security

Residual Security

A security that has the potential to dilute its issuer's earnings per share. For example, a convertible bond can be exchange for so many shares of common stock. If it is exchanged, then the earnings per common share are diluted because there are now more common shares by which to divide earnings. For that reason, a convertible bond is a residual security.

residual security

A security with the potential for diluting earnings per share. A convertible bond is a residual security because conversion of the bond by an investor will result in more shares of common stock outstanding and a reduction in earnings per share.
References in periodicals archive ?
Senator Bob Corker, Ranking Member of the Senate Foreign Relations Committee, applauded Obama's announcement that he will support the size of the residual security forces requested by US commanders.
The secretary general's report also expressed concern over the residual security threats facing Lebanon and the recent political uncertainty in Israel after Foreign Minister Tzipi Livni failed to form a coalition government.
Subsequently in a NIM transaction, the company sells a substantial portion of its residual asset for cash, resulting in a significantly smaller residual security retained by the company.
In establishing the net book value of the residual securities on a quarterly basis, management reviews the underlying assumptions used to value each residual security.
In establishing the net book value of the residual securities, management reviews on a quarterly basis the underlying assumptions used to value each residual security and adjusts the carrying value of the securities based on actual experience and trends in the industry.
The Company funded the over-collateralization account (O/C Account) upon the issuance of the second quarter adjustable/fixed rate security, which results in immediate cash flow to the residual security owned by the Company, and a higher residual value.
This structure results in immediate cash flow to the residual security and a higher recorded value for the residual security because of the early cash flow.
The Company funded the overcollateralization account (O/C Account) upon the issuance of the third quarter adjustable-rate security, which results in immediate cash flow to the residual security owned by the Company, and a higher residual value.
The Company funded the overcollateralization account (O/C Account) upon the issuance of the second quarter adjustable rate security, which results in immediate cash flow to the residual security owned by the Company, and a higher residual value.
The Company funded the overcollateralization account (O/C Account) upon the issuance of each first quarter security, which results in immediate cash flow to the residual security owned by the Company, and a higher residual value.
As part of the quarterly review, a value range was estimated for each residual security.
In recording the residual security, assumptions were the same as those used to record the original residual securities, with the exception of the discount rate, which was increased from 12% to 15% to reflect the uncertainty related to the delay in cash flow.